Form1_1F_3Q_60_Rulemaking RM21-11 supp. statement_8_3_2022

FERC Form Nos. 1, 1-F, 3-Q (electric) and 60, Notice of Proposed Rulemaking (NOPR) Docket No. RM21-11-000.

OMB Control Nos. 1902-0021, 1902-0029, 1902-0205, and 1902-0215

RIN: 1902-AF96

Consolidated Supporting Statement for

FERC Form Nos. 1, 1-F, 3-Q (electric), and 60 as modified by RM21-11-000

The Federal Energy Regulatory Commission (Commission or FERC) requests the Office of Management and Budget (OMB) approve updates to the requirements as defined in Notice of Proposed Rulemaking (NOPR) RM21-11-000 which update FERC Form Nos. 1, 1-F, and 3-Q (electric) and 60.¹

The NOPR (RM21-11-000) proposes to update, modify, or add various accounts under the existing Uniform System of Accounting (USofA)² to include accounts for non-hydro renewable energy generation, energy storage, renewable energy credits (RECs), and computer hardware, software, and communication equipment. Previously, these types of costs and expenses were recorded into various existing accounts, but varied from entity to entity. The differences between entities and their individual accounting standards, resulted in burdensome processes during analysis when evaluating if rates were just and reasonable. The NOPR seeks to remedy these processes by standardizing the accounting approaches, especially within non-hydro renewable energy sources.

The NOPR only applies to electric entities and does not impact the 3-Q (gas) (OMB Control No. 1902-0205) filers.

1. CIRCUMSTANCES THAT MAKE THE COLLECTION OF INFORMATION NECESSARY

FERC Form Nos. 1, 1-F, 3-Q (electric), and 60. In accordance with sections 304 and 309 of the Federal Power Act (FPA) and the Energy Policy Act of 2005, which updated the Public Utility Holding Company Act of 2005 (PUHCA), FERC is authorized to prescribe rules and regulations concerning accounting and recordkeeping and to require public utilities and licensees to file reports.

Under the existing regulations, FERC jurisdictional entities subject to its Uniform System of Accounts (USofA) must annually file with the Commission a complete set of financial statements, along with other selected financial and non-financial data through the submission of FERC Form Nos. 1 and 1-F. FERC Form No. 1 is a comprehensive financial and operating report submitted for electric rate regulation, market oversight analysis, and financial audits by Major electric utilities, licensees, and others. “Major electric utilities and licensees” means utilities and licensees that have, in each of the last three consecutive calendar years, sales or transmission services that exceed one of the following: (1) one million megawatt hours of total sales; (2) 100 megawatt hours of sales for resale; (3) 500 megawatt hours of power exchanges delivered; or (4) 500 megawatt hours of wheeling for others (deliveries plus losses).³

FERC Form No. 1-F is designed to collect financial and operational information from Nonmajor electric utilities and licensees. “Nonmajor electric utilities and licensees” means utilities and licensees that have total annual sales of 10,000 megawatt-hours or more in each of the last three consecutive years and that are not classified as Major.⁴

FERC Form No. 3-Q (electric) is a quarterly financial and operating report for rate regulation, market oversight analysis, and financial audits which supplements the (a) FERC Form Nos. 1 and 1-F for the electric industry. FERC Form No. 3-Q is submitted for electric utilities and licensees reporting FERC Form Nos. 1 or 1-F.

FERC Form No. 60 is an annual reporting requirement for centralized service companies. The report’s function is to collect financial information (including balance sheet, assets, liabilities, and billing and charges for associated and non-associated companies) from centralized service companies subject to the Commission’s jurisdiction.

The Commission collects FERC Form Nos. 1, 1-F, and 3-Q as prescribed in Title 18 C.F.R. (Code of Federal Regulations) Parts 141.1, 141.2, 141.400, and 260.300. FERC Forms Nos. 1, 1-F, and 3-Q provide an informative picture of the jurisdictional entities’ financial conditions and other relevant data that are used by the Commission and the public in making economic judgments about the entity or its industry. The Commission also collects FERC Form 60 as prescribed in the Public Utility Holding Company Act of 2005 (PUHCA 2005).

Proposed changes in RM22-11-000

The NOPR, RM22-11-000 is a proposal in response to public comments following the Commissions’ Notice of Inquiry⁵ regarding the USofA and the names of certain accounts and expenditures that are currently disclosed in the FERC Form 1, 1-F, and 3-Q, particularly regarding accounts relevant to non-hydro renewable energy, energy storage, RECs, and computer hardware, software, and communication equipment. The proposed rule updates, modifies, and adds new accounts for reporting to the USofA for renewable energy assets including energy storage, computer hardware, software, and communication equipment. Under the current USofA, items, such as those stated above, are recorded in differing accounts based upon individual firms accounting decisions or interpretations. For example, renewable generation related expenditures were often recorded in several accounts under the sub-function heading labeled, “other generation,” but the account classifications could vary from firm to firm since the existing guidance does not provide specificity for non-hydro renewable system components. This non-standard approach to accounting could result in increased litigation and discovery efforts that would be burdensome and time-consuming. Thus, the Commission, in RM21-11-000, proposed updates to the USofA standards that define additional and modified accounts.

2. HOW, BY WHOM, AND FOR WHAT PURPOSE THE INFORMATION IS TO BE USED AND THE CONSEQUENCES OF NOT COLLECTING THE INFORMATION

FERC Form Nos. 1, 1-F, and 3-Q (electric). These forms provide information concerning a company’s current performance, compiled using the Commission’s USofA.⁶ The forms include a basic set of financial statements: Comparative Balance Sheet, Statement of Income, Statement of Retained Earnings, Statement of Cash Flows, and the Statement of Comprehensive Income and Hedging Activities and supporting schedules containing supplementary information. Electric respondents report revenues and the related quantities of electric sales and electricity transmitted, account balances for all electric operation and maintenance expenses, selected plant cost data, and other statistical information.

Information in the forms is used by the Commission, state regulatory agencies, and others in the review of the financial condition of regulated companies. FERC Form Nos. 1 and 1-F provides data that enables the Commission to develop and monitor cost-based rates, analyze costs of different services and classes of assets, and compare costs across lines of business. The USofA permits companies to account for similar transactions and events in a consistent manner with its industry, and communicate those results to the Commission on a periodic basis. The information is also used in market oversight, the Commission’s audit programs, and the computation of annual charges based on certain schedules contained on the forms.

Additionally, the uniformity helps accurately present the entity's financial condition and produces comprehensive data related to the entity's financial history which acts as a guide for future action. The uniformity provided by the Commission's USofA and related accounting instructions permits comparability and financial statement analysis of data provided by jurisdictional entities. Comparability of data and financial statement analysis for a particular entity from one period to the next, or between entities, within the same industry, would be difficult to achieve if each company maintained its own accounting records using dissimilar accounting methods and classifications to record similar transactions and events.

FERC Form No. 60. FERC Form No. 60 is an annual reporting requirement for centralized service companies. The report’s function is to collect financial information (including balance sheet, assets, liabilities, and billing and charges for associated and non-associated companies) from centralized service companies subject to the Commission’s jurisdiction. Unless Commission rule exempts or grants a waiver pursuant to 18 C.F.R. §§ 366.3 and 366.4 to the holding company system, every centralized service company in a holding company system must prepare and file electronically with the Commission, the FERC Form No. 60, pursuant to the General Instructions in the form.

If data from the FERC Form Nos. 1, 1-F, 3-Q (electric), and 60 were not available, it would be difficult for the Commission to meet its mandatory review responsibilities because it would have fewer regulatory mechanisms to ensure transparency and to protect ratepayers.

Proposed changes in NOPR RM22-11-000

The NOPR (RM22-11-000), does not impact the purpose or use of the data collected in the FERC Form No. 1, 1-F, or 3-Q. However, the NOPR distinguishes new and modified accounts within the accounting standards. Specifically, the NOPR does not require additional information to be collected, rather it is proposing changes to how that existing information is recorded in existing, modified and new accounts related to non-hydro renewable energy, energy storage, RECs, and computer hardware, software, and communication equipment.

3. DESCRIBE ANY CONSIDERATION OF THE USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE THE BURDEN AND TECHNICAL OR LEGAL OBSTACLES TO REDUCING BURDEN

The forms are filed electronically in XBRL pursuant to the requirements of Order No. 859.

4. DESCRIBE EFFORTS TO IDENTIFY DUPLICATION AND SHOW SPECIFICALLY WHY ANY SIMILAR INFORMATION ALREADY AVAILABLE CANNOT BE USED OR MODIFIED FOR USE FOR THE PURPOSE(S) DESCRIBED IN INSTRUCTION NO. 2

The Commission's filings and data requirements are periodically reviewed in conjunction with OMB clearance expiration dates.

FERC Form Nos. 1, 1-F, 3-Q (electric), and 60. While some jurisdictional entities may file similar financial information with the Securities and Exchange Commission (SEC), the level of detail concerning assets, liabilities, stockholders' equity, along with the revenues, expenses, gains, and losses is different for the Commission and the SEC. The financial statements filed with the SEC are on a consolidated, or parent company basis. The Commission notes that a majority of the jurisdictional entities that it regulates files financial information with the SEC that consolidates their assets, liabilities, and profits with their parent company, or combines the regulated and unregulated operations in the reports to the SEC. While consolidation is appropriate for SEC reporting, the Commission requires more detailed information concerning the results of operations, and the financial position of each jurisdictional entity in order to meet its regulatory needs. Pursuant to the FPA, the Commission regulates the rates, terms, and conditions of each jurisdictional entity. Accordingly, entity-specific financial and operational information is required as it provides detailed components of an entity’s approved rate on file with FERC. For this reason, the Commission requires jurisdictional entities to file financial information on a jurisdictional entity level basis using a uniform system of accounts. Additionally, FERC regulates several private companies, cooperatives, and governmental entities at various levels that are not required to file financial statements with the SEC.

5. METHODS USED TO MINIMIZE THE BURDEN IN COLLECTION OF INFORMATION INVOLVING SMALL ENTITIES

FERC Form Nos. 1, 1-F, 3-Q (electric), and 60. As noted previously, FERC Form No. 1 is filed by major utilities or licensees and as such does not apply to small entities. FERC Form No. 1-F is filed by nonmajor public utilities with total sales of 10,000 megawatt-hours or less. The FERC Form No. 3-Q (electric) is filed only by electric companies that file Forms Nos. 1 or 1-F, and therefore excludes companies that do not qualify as Major or Nonmajor. Form No. 60 only applies to jurisdictional entities (centralized service companies), which generally are not small entities.

If the reporting requirements represent an undue burden on small businesses, the affected entity may seek a waiver of the disclosure requirements from the Commission. However, the Commission believes that the information collected on these forms is the minimum necessary to provide a meaningful review of financial conditions and would impose the least possible burden on entities.

Note: If the entity does not meet the requirements for Form No. 60, they may complete the FERC Form No. 61. However, in the case of the NOPR (Docket No. RM21-11-000), the Form 61 is not impacted since it is a narrative description of the companies, which remain unaffected by this rulemaking as it does not include accounting figures.

6. CONSEQUENCE TO FEDERAL PROGRAM IF COLLECTION WERE CONDUCTED LESS FREQUENTLY

FERC Form Nos. 1, 1-F, and 3-Q. The existing FERC Form Nos. 1 and 1-F are required by the Commission to be submitted annually. Annual reporting is consistent with the reporting to the companies' own management, the Internal Revenue Service, state and other Federal agencies' requirements. FERC Form No. 3-Q filings provide quarterly updates to supplement the FERC Form Nos 1, 1-F, 2, and 2A (2 and 2A are not impacted by RM21-11-000). This quarterly information provides the Commission and the public with updated and timely information regarding a company’s financial and operational status.

FERC Form No. 60 provides a level of transparency that: 1) helps protect ratepayers from pass-through of improper service company costs, 2) enables the Commission to review and determine cost allocations (among holding company members) for certain non-power goods and services, 3) aids the Commission in meeting its oversight and market monitoring obligations, and 4) benefits the public, both as ratepayers and investors. In addition, the Commission’s audit staff use these records during compliance reviews and special analyses.

Some of the information in particular filings may change markedly from one year to the next. If the information were collected less frequently, the Commission would have difficulty performing its mandated review and oversight in a timely and accurate manner.

7. EXPLAIN ANY SPECIAL CIRCUMSTANCES RELATING TO THE INFORMATION COLLECTION

There are no special circumstances related to these information collections.

8. DESCRIBE EFFORTS TO CONSULT OUTSIDE THE AGENCY: SUMMARIZE PUBLIC COMMENTS AND THE AGENCY’S RESPONSE

Prior to the NOPR RM21-11-000 being issued, the Commission engaged the public by issuing a Notice of Inquiry⁷ on January 19, 2021 on the appropriate accounting treatment of renewable energy assets. The Commission received four comments and three reply comments expressing the need for Commission guidance on accounting for the shifting energy generation mix. Commentors generally agree with the need for Commission accounting guidance on non-hydro renewable energy resources; however, some commentors find that new accounts are needed while others believe existing accounts could be used with additional Commission clarification. Commentors agreed that the Commission’s policies on renewable energy credits (RECs) should be codified in the USofA and provide additional transparency. A commentor also suggested that the current accounts and guidance for energy storage assets, subjects utilities to significant administrative burden and that instead creating one separate function for energy storage would allow for better rate allocation practices. Commentors also recognized the need for the Commission to update FERC Forms to correspond with any changes made in the USofA.

The Commission issued the NOPR RM21-11-000 on 7/28/2022. The Federal Register published the NOPR on October 3, 2022. The public was given 45 days to provide comments on the NOPR following the publication in the Federal Register.

9. EXPLAIN ANY PAYMENT OR GIFTS TO RESPONDENTS

The Commission does not make payments or gifts to respondents related to these collections.

10. DESCRIBE ANY ASSURANCE OF CONFIDENTIALITY PROVIDED TO RESPONDENTS

The information collected in FERC Form Nos. 1, 1-F, and 3-Q is publicly available. However, the Commission will consider specific requests for confidential treatment (e.g., Critical Energy/Electric Infrastructure Information [CEII] or non-public) to the extent permitted by law.⁸ The Commission will review each request for confidential treatment on a case-by-case basis.

11. PROVIDE ADDITIONAL JUSTIFICATION FOR ANY QUESTIONS OF A SENSITIVE NATURE, SUCH AS SEXUAL BEHAVIOR AND ATTITUDES, RELIGIOUS BELIEFS, AND OTHER MATTERS THAT ARE COMMONLY CONSIDERED PRIVATE.

The forms do not contain questions of a sensitive nature.

12. ESTIMATED BURDEN OF COLLECTION OF INFORMATION

The NOPR RM21-11-000 includes both a one time burden and continued burden. The one-time implementation burden includes updating, adding, and modifying accounts to be compliant with the NOPR in Docket No. RM21-11-000. This includes updates to the Form Nos. 1, 1-F, 3-Q (electric), and 60 for the creation of new accounts and production subfunctions for wind, solar, and other non-hydro renewable assets; establishing a new functional class for energy storage accounts; codifying the accounting treatment of RECs, and creation of new accounts within existing functions for computer hardware, software, and communication equipment. The Commission further estimates that the ongoing, continued burden will be comparable to the current OMB approved estimates for each of the forms.

The one time burden and cost⁹ of the information collections follow.

Table 1: RM21-11-000 NOPR Estimated One-Time Implementation Burden and Cost, in Year 1
Requirement	Number of Respondents (1)	Annual Number of Responses per Respondent (2)	Total Number of Responses (1)*(2)=(3)	Average Burden & Cost Per Response (rounded)10 (4)	Total Annual Burden Hours & Cost (rounded) (3)*(4)=(5)	Annual Cost per Respondent (rounded)($) (5)÷(1)
Form No. 1	217	1	217	48.3 hrs.; $4,202	10,481.1 hrs.; $911,834	$4,202
Form No.1-F	2	1	2	48.3 hrs.; $4,202	96.6 hrs.; $8,404	$4,202
Form No. 3-Q electric11	221	3	663	0 hrs. $0	0 hrs. $0	$0
Form No. 60	42	1	42	3.7 hrs.; $322	155.4 hrs.; $13,524	$305
Total for Implementation Burden			924		10,733.1 hrs.; $933,762

The ongoing estimated burden and cost of the information collections follow.

Table 2: RM21-11-000 NOPR Estimated Annual Ongoing Burden and Cost (current), Starting in Year 2
Requirement	Number of Respondents (1)	Annual Number of Responses per Respondent (2)	Total Number of Responses (1)*(2)=(3)	Average Burden & Cost Per Response (4)	Total Annual Burden Hours & Cost (3)*(4)=(5)	Annual Cost per Respondent ($) (5)÷(1)
Form No. 1	217	1	217	1,182 hrs.; $102,834	256,494 hrs.; $22,314,978	$102,834
Form No.1-F	2	1	2	136 hrs.; $11,832	272 hrs.; $23,664	$11,832
Form No. 3-Q electric	221	3	663	168 hrs. $14,616	111,384 hrs. $9,690,408	$43,848
Form No. 60	42	1	42	78 hrs.; $6,786	3,276 hrs.; $285,012	$6,786
Total Ongoing Burden (current)			924		371,426 hrs.; $32,314,062

13. ESTIMATE OF THE TOTAL ANNUAL COST BURDEN TO RESPONDENTS

All costs are related to burden hours and are discussed in Questions 12 and 15. There are no capital costs.

14. ESTIMATED ANNUALIZED COST TO FEDERAL GOVERNMENT

The estimate of the cost for ‘analysis and processing of filings’¹² is based on salaries and benefits for professional and clerical support. This estimated cost represents staff analysis, decision-making, and review of any actual filings submitted in response to the information collections. (The corresponding annual and hourly FERC costs use the figures for 2021, as noted.) The estimated costs are divided equally by three in ROCIS.

The Paperwork Reduction Act (PRA) Administrative Cost¹³ is the average annual FERC cost associated with preparing, issuing, and submitting materials necessary to comply with the PRA for rulemakings, orders, or any other vehicle used to create, modify, extend, or discontinue an information collection. It also includes the cost of publishing the necessary notices in the Federal Register.

In addition to the analysis and PRA costs, the Commission also will need to update its filing forms and related IT systems including: updating the XBRL taxonomies for FERC Forms 1, 1-F, 3-Q, and 60. The cost to the Commission is procurement sensitive and not available at this time.

The estimated annualized cost to the Federal Government follows.¹⁴

Information Collection	Full-Time FERC Staff Equivalents (FTEs) for 'Analysis & Processing of Filings'	FERC Staff Cost of Analysis & Processing of Filings (FTEs * $180,703/year)	PRA Administrative Cost ($8,279 per collection)	Estimated Annual Federal Cost (rounded)
FERC Form Nos. 1, 1F, & 3-Q (electric)	4	$722,812.00	$24,837.00	$747,649.00 ($249,216 per collection)
FERC Form No. 60	0.5	$90,352.00	$8,279.00	$98,631.00

15. REASONS FOR CHANGES IN BURDEN INCLUDING THE NEED FOR ANY INCREASE

Program Changes.

Due to the proposed rule RM21-11-000, there is an increase in burden. The burden increase is a one-time (year 1) increase, then the Commission estimates that the ongoing burden (year 2 and beyond) will return to the current levels.

The following table shows the previously approved costs reflected in the FERC metadata and illustrates the one-time implementation costs to comply with the proposed rule RM21-11-000. The one-time implementation estimate includes a one time annual increase in burden hours and responses.

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	Total Request	Previously Approved	Change due to Adjustment in Estimate	Change Due to Agency Discretion
FERC Form No. 1 (Due to RM22-11-000)
Annual Number of Responses	434	217	0	+217
Annual Time Burden (Hr.)	266,975	256,494	0	+10,481
Annual Cost Burden ($)	$0	$0	$0	$0
FERC Form No. 1-F (Due to RM22-11-000)
Annual Number of Responses	4	2	0	+2
Annual Time Burden (Hr.)	369	272	0	+97
Annual Cost Burden ($)	$0	$0	$0	$0
FERC Form No. 3-Q (Due to RM22-11-000)
Annual Number of Responses	663	663	0	0
Annual Time Burden (Hr.)	111,38415	111,384	0	0
Annual Cost Burden ($)	$0	$0	$0	$0
FERC Form No. 60 (Due to RM22-11-000)
Annual Number of Responses	286	244	0	+42
Annual Time Burden (Hr.)	138,226	134,950	0	+3,276
Annual Cost Burden ($)	$49,14816	$49,148	$0	$0

16. TIME SCHEDULE FOR PUBLICATION OF DATA

The information provided in FERC Form Nos. 1, 1-F, 3-Q (electric), and 60 is available on the FERC website (Electric Industry Forms | Federal Energy Regulatory Commission (ferc.gov) and Service Companies Filing Forms | Federal Energy Regulatory Commission (ferc.gov)). The data is collected for regulatory purposes and not for the purposes of a publication.

17. DISPLAY OF EXPIRATION DATE

FERC Form Nos. 1, 1-F, 3-Q (electric), and 60 display the OMB control numbers and the expiration dates. FERC provides the OMB Control Numbers of the information collections along with their expiration dates at www.ferc.gov/information-collections.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT

There are no exceptions.

1 For purposes of this consolidated notice, Form No. 60 is included as it will be impacted by RM21-11-000. However, Form Nos. 555A and Form 61 are not impacted by the rulemaking, but will remain in the existing collection under OMB Control No. 1902-0215 in the future.

2 18 USC 101

3 18 C.F.R. § 141.1. Nonoperating entities formerly designated as Major and new entities that expect to be in the Major category should file as detailed in 18 C.F.R. § 101, General Instructions (1)(A)(3).

4 18 C.F.R. § 141.2. Nonoperating entities formerly designated as Nonmajor and new entities that expect to be in the Nonmajor category should file as detailed in 18 C.F.R. § 101, General Instructions (1)(A)(2).

5 Accounting and Reporting Treatment of Certain Renewable Energy Assets, 174 FERC ¶ 61,032 (2021) (NOI).

6 See 18 C.F.R. Part 101 (Uniform System of Accounts Prescribed For Public Utilities And Licensees Subject To The Provisions Of The Federal Power Act).

7 Accounting and Reporting Treatment of Certain Renewable Energy Assets, 174 FERC ¶ 61,032 (2021) (NOI).

8 18 C.F.R. §§ 388.112 and 388.113. More information on the CEII definition, program and requirements is posted at http://www.ferc.gov/legal/ceii-foia/ceii.asp.

9 The cost is based on FERC’s 2021 Commission-wide average salary cost (salary plus benefits) of $87.00/hour. The Commission staff believes the FERC FTE (full-time equivalent) average cost for wages plus benefits is representative of the corresponding cost for the industry respondents.

10 The average burden and cost per response is calculated using the hourly wage figures for FERC staff. The Commission estimates that the costs for the Commission are comparable to those in industry. Commission staff average salary plus benefits totals $180,703 or $87 per hour.

11 The Commission assumes that the one-time burden for the FERC Form No. 3-Q is incorporated into the calculation of FERC Form No. 1 since quarterly filings are typically a subset of the annual filings.

12 The estimate uses the FERC’s FY 2021 average annual salary plus benefits of one FERC FTE (full-time equivalent [$180,703 per year or $87.00 per hour]). (These estimates were updated in June 2021.)

13 This estimate was updated June 2021.

14 The federal costs for the FERC Form Nos. 1, 1-F, and 3-Q (for both electric and gas) will be included under the ICR for FERC Form No. 1 in ROCIS and reginfo.gov.

15 The one time burden associated with the 3-Q (electric) is included in the Form No. 1 estimate because quarterly filings are typically a subset of the annual filings.

16 The cost associated here is the costs related to FERC collection 555A, which is specific to record retention. This requirement is unchanged by RM22-11-000 and is not impacted. For consistency, we are keeping the costs in this table to match the ROCIS metadata, even though the costs are not directly related to the NOPR RM22-11-000.

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